Primaris Unitholders Encouraged to Seize Liquidity at a Premium Price by
Tendering to the Offer
TORONTO, Dec. 20, 2012 /CNW/ - The KingSett Capital led consortium
commented today on the Trustee's Circular issued earlier today by
Primaris Retail Real Estate Investment Trust ("Primaris") in response
to the all-cash offer of $26.00 per Primaris unit (the "Offer") made by
KS Acquisition II LP (the "Offeror"). As previously disclosed, the
Offeror is a limited partnership owned equally and beneficially by a
KingSett Capital managed fund and by Ontario Pension Board. A full
discussion of the Offer, including reasons to accept the Offer, is
available at www.kingsettprimarisoffer.com.
Jon Love, KingSett Capital Managing Partner, said, "The Primaris
Trustees' Circular does not contain any new value-enhancing information
about Primaris that was not already taken into account in formulating
our offer. Primaris is asking its unitholders to forgo an opportunity
to seize liquidity at a premium price." Jon Love added, "Our offer is
currently the only premium offer available to Primaris unitholders and
we are confident that they will recognize that it delivers full and
fair value for Primaris units and is in their best interest to tender
their units to the offer."
The KingSett Capital led consortium urges Primaris unitholders to
consider the following points in response to the Primaris Trustees'
The Offer Represents Full Value for Primaris Units
The Offer price represents a significant premium of approximately 13% to
the closing price of Primaris units on the TSX on December 4, 2012 (the
last trading day before the Offeror announced its intention to make the
Offer). There are a number of Canadian REIT transactions that have
been completed at similar or lower premiums to the Offer. In the
absence of the Offer, it is likely that the trading price of Primaris
units will decline to levels prior to the announcement of the Offeror's
intention to make the Offer.
Primaris unitholders should note that the Offer represents a premium
price at a time of peak valuations in the sector. Although Primaris
has increased its portfolio size over the past 5 years, it has
generated growth in fully diluted funds from operations (FFO) of only
1.4% per annum1. The historical appreciation in Primaris' unit price during this time
has been primarily a function of lower interest rates and lower
capitalization rates in the Canadian real estate sector. Primaris
unitholders should not assume that capitalization rates will continue
to decrease. According to a report published on December 6, 2012 by a
North American portfolio strategist and quantitative analyst at
Canaccord Genuity, one of the disclosed financial advisors to Primaris,
the analyst commented, "Stay underweight Canadian REITs owing to
relative overvaluation conditions of publicly listed companies." The
analyst also noted that, "Similar overvaluations were seen at the peak
of the sector in 1997 and early 2007."
The Offer fully considers and reflects Primaris' future growth
Prior to the announcement of the Offer, Primaris had already
communicated its growth plans and strategy to the market, including an
announcement in June 2011 detailing the conversion of certain stores in
its portfolio from Zellers to Target stores as well as regular updates
on various redevelopment projects. Accordingly, such initiatives were
fully reflected in the pre-announcement trading price of Primaris units
to which the Offer provides a significant premium.
The internal growth opportunities available to Primaris are more
challenging than expressed by Primaris. The majority of Primaris'
portfolio is comprised of enclosed shopping centres in secondary
markets where there are fewer opportunities to increase rental rates,
attract new tenants and exploit redevelopment, mixed use and
intensification initiatives. Primaris also does not highlight the risks
related to four of its properties, all in tertiary markets, where in
2013 Target is not replacing vacating Zellers stores.
Although Primaris has grown through acquisitions, further acquisitions
at current historically low capitalization rates may not be accretive
to the long-term interest of Primaris unitholders.
Represents the estimated compound annual growth rate (CAGR) for the 5
years ended December 31, 2012 for reported funds from operations (FFO)
per unit on a diluted basis. 2012 FFO per unit estimated by
annualizing the reported FFO per unit (diluted) for the 9 months ended
September 30, 2012.
The Offer has a high likelihood of completion
The Offer is not subject to any financing condition and is subject only
to a limited number of customary conditions for transactions of this
As disclosed previously, KingSett and Ontario Pension Board are
supported by prominent Canadian real estate investors and operators,
including RioCan Real Estate Investment Trust, Canada's largest real
estate investment trust. This group has a proven track record for
completing major real estate transactions and are fully committed to
completing this transaction.
Primaris unitholders can substantially enhance value and annual
distribution income by tendering to the Offer and reinvesting the
There are currently over 50 Canadian real estate public companies which
have a collective market capitalization of over $60 billion.
Furthermore, the number of Canadian public real estate companies will
likely increase in light of the recent announcements of potential
spin-off plans by Loblaw and Hudson's Bay Company. Primaris
unitholders can receive substantially enhanced value and realize a
significant increase in their annual distribution income by reinvesting
premium proceeds received under the Offer into comparable REITs at
their current trading values.
Primaris will have sufficient time to fully consider the Offer
Since announcement of the Offeror's intention to make Offer on December
5, 2012 to January 17, 2013 (expiry date of the Offer), Primaris will
have had 43 days to fully consider the Offer and any other alternatives
available to Primaris. Sophisticated parties that have an interest in
pursuing a transaction with Primaris will have had sufficient time to
organize their affairs and to propose any alternative to the Offer.
About the Offer
Full details of the offer are included in the Offer to Purchase,
takeover bid circular and ancillary documents dated December 10, 2012,
that are available to Primaris unitholders by visiting www.sedar.com or the Offeror's web site at www.kingsettprimarisoffer.com.
The Offer is open for acceptance until 5:00 p.m. (Toronto time) on
January 17, 2013, unless it is extended or withdrawn by the Offeror.
Unitholders with questions related to the Offer, should contact CST
Phoenix Advisors, the information agent in connection with the Offer,
at 1-866-822-1237 (North American toll-free) or 201-806-2222 (collect calls) or by email
The Offeror has engaged TD Securities Inc. and CIBC World Markets Inc.
as financial advisors. Its legal advisors are Osler, Hoskin & Harcourt
LLP and Bennett Jones LLP.
About KingSett Capital
KingSett Capital is Canada's leading private equity real estate
investment business, co-investing with pension fund and high net worth
individual clients. KingSett Capital invests through a series of growth
funds, mortgage funds and a core investment income fund, each with its
own risk/return strategy. KingSett Capital has executed transactions
valued at over $12.5 billion in the past 10 years.
About Ontario Pension Board
Ontario Pension Board administers Ontario's Public Service Pension Plan,
a defined benefit pension plan serving more than 42,000 members and
their employers as well as more than 40,000 pensioners and deferred
members. With more than $17 billion in assets, it is one of Canada's
largest pension plans. Over the last 20 years, Ontario Pension Board
has become one of Canada's leading direct owners of high
quality shopping centres.
This announcement is for informational purposes only and does not
constitute or form part of any offer or invitation to purchase,
otherwise acquire, subscribe for, sell, otherwise dispose of or issue,
or any solicitation of any offer to sell, otherwise dispose of, issue,
purchase, otherwise acquire or subscribe for, any security. The
release, publication and distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published and
distributed should inform
themselves about and observe such restrictions. The Offer is not being
made in, nor will deposits of securities be accepted in, any
jurisdiction in which the making or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Offeror
may, in its sole discretion, take such action as it deems necessary to
extend the Offer in any such jurisdiction.
Certain information contained in this news release constitutes
"forward-looking information" (or "forward-looking statements") within
the meaning of applicable securities laws. All statements, other than
statements of historical or present fact, constitute forward-looking
information and typically include words and phrases about the future
such as "may", "will", "anticipate", "estimate", "anticipate",
"expect", "plan", "intend", "believe", "predict", "goal", "target",
"project", "potential", "strategy" and "outlook" or the negative
thereof or similar variations. Forward-looking information is
necessarily based upon a number of assumptions that, while considered
reasonable by each of KingSett Capital and Ontario Pension Board, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies. KingSett Capital and Ontario Pension
Board caution the reader that such forward-looking information involves
known and unknown risks, uncertainties and other factors, estimates and
assumptions that may cause actual results and developments to differ
materially from those expressed or implied by such forward-looking
information. Some important factors, estimates and assumptions that
could cause actual results to differ materially from expectations
among other things, the assumption that KingSett Capital and Ontario
Pension board will acquire a 100% interest in Primaris through the
Offer; the assumption that all of the conditions to the Offer will be
satisfied; certain assumptions relating to general economic conditions,
market factors, competition, changes in government regulation and
changes in prevailing interest rates; and the assumption that there are
no inaccuracies or material omissions in Primaris' publicly available
information, and that Primaris has not disclosed events which may have
occurred or which may affect the significance or accuracy of such
information. While KingSett Capital and Ontario Pension Board consider
these factors, estimates and assumptions to be reasonable based on
information currently available to them, they may prove to be
inaccurate. The information concerning Primaris contained in this press
release has been taken from or is based entirely upon Primaris'
publicly available documents and has not been independently verified by
KingSett Capital or Ontario Pension Board. Neither KingSett Capital,
Ontario Pension Board, nor any of their respective directors or
officers assumes any responsibility for the accuracy or completeness of
such information, or for any failure by Primaris to disclose events or
facts which may have occurred or which may affect the significance or
accuracy of any such information, but which are
unknown to KingSett Capital and Ontario Pension Board. Forward-looking
information contained herein are made as of the date of this press
release based on the opinions and estimates
of each of KingSett Capital and Ontario Pension Board on the date
statements containing such forward-looking information are made.
KingSett Capital and Ontario Pension Board do not undertake any
obligation to update or revise forward-looking information, whether as
a result of new information, future events or otherwise, except to the
extent legally required. Accordingly, readers should not place any
undue reliance on forward-looking information.
SOURCE: KingSett Capital
For further information:
Tel: (604) 644-6090
CST Phoenix Advisors
North American Toll-Free Phone : 1-866-822-1237
Banks, brokers and collect calls : 201-806-2222
Toll-Free Facsimile : 1-888-509-5907
Email : email@example.com